A car lease is both similar and different than a car loan. A lease means that you're basically borrowing the car, while a loan means that you're purchasing the car. Both a loan and lease require some credit history. If you've made any past car payments, rent payments or anything where credit is involved, you have credit history.
Credit Needed
Unfortunately there's no magical credit score that will get someone approved for a car lease, although credit scores over 620 are more likely to get a person approved. A lack of credit history will be a problem, because if someone has no credit history, they likely won't have a credit score. Financial institutions consider leasing a car more of a risk than buying a car, which means the person leasing must show the financial institution that he has a history of repaying borrowers. If the potential lessee cannot show such proof, the financial instruction has no choice but to deny him the lease.
Interest Rate
If a financial institution does offer a lease to someone who has very little credit history or poor credit, the interest rate on the lease will typically be above the national average. A lease interest rate is expressed as a money factor, which is a small number and bears no resemblance to a normal APR on a car loan. To find the APR on a lease, a person can multiply the money factor by 2,400. For example, if someone is offered a lease with a money factor rate of .001875, the APR would be 4.5 percent. According to bankrate.com as of January 29, 2011, the national average APR for a new 48-month auto loan is 5.16 percent, so the interest rate for someone with no credit history would likely increase significantly, to the tune of 3 to 5 percent. It's important to note that the average interest rate for auto loans and leases do not differ; they're nearly identical.
Co-signer
The financial institution may still approve someone with no credit history for a car lease if the person has a co-signer. A co-signer acts as a guarantee to the financial institution that the lease will be paid. If the person granted the lease does not make the specified payments, the co-signer must step in and make the payments. A co-signer must have good to excellent credit. A credit score of over 620 will usually suffice, although if the lessee's credit score is abysmal, such as 500 or below, the bank may want a co-signer with higher credit.
Upfront Payment
Unlike a car loan, a down payment for a car lease is not required. However, if a person has poor credit or no credit history, the financial institution may request a down payment. The reason the financial institution would ask for a down payment is because a down payment minimizes the institution's risk of granting a lease to someone with no credit history. For example, a down payment of $2,400 minimizes any potential losses the bank would incur if the person cannot make their payments.
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